Beyond the regular pay package employees receive at the end of a work period, managers can employ extra rewards in a workplace. When such rewards are material, and of value, they are called tangible rewards. The logic behind them is simple. Who doesn’t value recognition, especially when the recognition comes with gifts that could improve comfortability and quality of life?
The major drawback of using tangible rewards in a workplace is the risk of performance starting to hinge on such rewards. In such cases, employees show much-reduced motivation when such rewards are not up for grabs.
Another problem is the potential for favoritism. The bias doesn’t always have to exist; if some employees think it does, then the damage is done. Managers can avoid this by keeping the reward structure consistent and transparent.
Note: Tangible rewards shouldn’t wholly replace intangible rewards, especially important ones like promotions. This is because while intangible rewards are good for boosting short-term morale, certain intangible rewards are essential for long-term employee satisfaction.